Further Reading

Bitcoin-mining operations are set to overtake domestic residential energy consumption in Iceland later this year, according to a local energy company. As a result, one lawmaker is considering what could or should happen if Iceland continues to expand its role as a major bitcoin-mining hub.

Iceland, the North Atlantic island nation with a population of just 340,000, is powered almost entirely by renewable energy, mostly geothermal, hydroelectric, and wind.

"Four months ago, I could not have predicted this trend—but then bitcoin skyrocketed, and we got a lot more emails," he said. "Just today, I came from a meeting with a mining company seeking to buy 18 megawatts," he said.

Sigurbergsson told the BBC that he expects the bitcoin industry to exceed the roughly 700 gigawatt hours that all Icelandic homes require.

A cluster of bitcoin farms is now operating in Keflavik, the southwestern town home to the Reykjavik International Airport, roughly 50 kilometers southwest of the capital city. The data centers are naturally cooled by the Icelandic air, keeping costs down further.

Elsewhere, The Wall Street Journal reports that the town of Wenatchee, Washington (pop. 31,000), has also become a hub for Bitcoin mining, again due to relatively inexpensive hydropower. Given that China is reportedly considering curtailing bitcoin mining, companies are looking at alternatives for mining locations, including Canada.

Further Reading

"We are spending tens or maybe hundreds of megawatts on producing something that has no tangible existence and no real use for humans outside the realm of financial speculation," Smári McCarthy, and Icelandic member of parliament told the AP. "That can't be good."

After being a digital activist for years, McCarthy, of the Icelandic Pirate Party, was elected to the Althing in 2016.

The AP story said that McCarthy was starting to think about whether bitcoin firms should be taxed as a result. On Twitter, he further explained that a "lot of details" of his viewpoint were not included in the story.

"Cryptocurrency mining requires almost no staff, very little in capital investments, and mostly leaves no taxes neither," he wrote. "The value to Iceland / value-generated ratio is virtually zero. Closer to zero the higher the value of cryptocurrencies."

"Another factor is risk to Iceland. It's kind of obvious that if a substantial part of the bitcoin mining network is in one country, then that country is a juicy target for electronic attacks," he continued. "We need to consider our national security ramifications. So what I've been proposing primarily is not taxes. Instead, I'd like to establish a few ground rules. For instance, banks, pension funds, and so on that are critically important to our economy should have rules that limit their exposure, like with other types of assets."

McCarthy further explained in a brief Signal call with Ars that he would like to meet with bitcoin companies in Iceland so that he can "know what they are doing" as a way to foster better dialogue with them.

"My primary thing was this is a great innovation, we don't know where it's going, it's a new thing, and new things should be developed and used but, at the same time, we need to be aware of the side effects that new tech can have on society," he said. "We need to start talking with the community about some baseline rules. That doesn't mean we're going to relegate it out of existence; that wouldn't help anybody."

Cyrus Farivar
Cyrus is a Senior Tech Policy Reporter at Ars Technica, and is also a radio producer and author. His latest book, Habeas Data, about the legal cases over the last 50 years that have had an outsized impact on surveillance and privacy law in America, is out now from Melville House. He is based in Oakland, California. Emailcyrus.farivar@arstechnica.com//Twitter@cfarivar

It's probably worth noting that Iceland has quite recent experience with enthusiastic financial innovators (the banking collapse that started in 2008 wasn't the largest in absolute terms; but per capita I don't think it has ever been exceeded); so they might be a little jumpy about having a new miracle wealth solution vendor show up.

"We are spending tens or maybe hundreds of megawatts on producing something that has no tangible existence and no real use for humans outside the realm of financial speculation," Smári McCarthy, an Icelandic member of parliament told the AP. "That can't be good."

Industry would like a word with you. They usually get cheaper rates the more power they buy in bulk. Iceland has a lot of fish processing plants. They need tons of power. This would only be viable if it only applied to Crypto miners.

Seems like a great way to make money by heating your home against the frigid winters, though. And it doesn't even come with the guilt of using fossil fuels to make funny money.

I'd rather that Iceland make a nation wide computing grid for that personally.

However as I understand it homes in Iceland are directly heated geothermally not via geothermally generated electricity so there's no savings to be made there.

Huh, well I guess the Icelanders are just lucky they can cheaply skim cash off the top of the world's financial follies using renewables. I wish I could do that! Ya can't even guilt 'em for not shipping power to other areas that use fossil fuels. There's no way to make that practical.

On the other hand it's much easier for me to get good Mexican food and I don't need an app to avoid accidentally banging my cousin, so I'd call it a pretty fair trade on the whole.

Incidentally, have you actually had Mexican food in Iceland? It's debatable whether the Mexican food in Japan was worse, but either way my stomach is clenching with the memory...

It's just so unsustainable; there's a very real risk that if a state, town, or a country like Iceland is tempted by the short-gains they'll build a load of new electricity generating capacity (which isn't cheap to implement) that will then become worthless when energy hungry cryptocurrencies inevitably collapse in the wake of something better.

Hopefully more places do the right thing and start rejecting new cryptocurrency farms, because I'd like to see movement towards alternatives before this escalates into a full-blown economic and ecological disaster.

Seems like a great way to make money by heating your home against the frigid winters, though. And it doesn't even come with the guilt of using fossil fuels to make funny money.

I'd rather that Iceland make a nation wide computing grid for that personally.

However as I understand it homes in Iceland are directly heated geothermally not via geothermally generated electricity so there's no savings to be made there.

Huh, well I guess the Icelanders are just lucky they can cheaply skim cash off the top of the world's financial follies using renewables. I wish I could do that! Ya can't even guilt 'em for not shipping power to other areas that use fossil fuels. There's no way to make that practical.

On the other hand it's much easier for me to get good Mexican food and I don't need an app to avoid accidentally banging my cousin, so I'd call it a pretty fair trade on the whole.

Incidentally, have you actually had Mexican food in Iceland? It's debatable whether the Mexican food in Japan was worse, but either way my stomach is clenching with the memory...

I haven't, but I work with a shitload of Finns and their understanding of it is sufficiently tragic that I have no desire to ever find out what an even smaller, more isolated Scandinavian country considers adequate.

Industry would like a word with you. They usually get cheaper rates the more power they buy in bulk. Iceland has a lot of fish processing plants. They need tons of power. This would only be viable if it only applied to Crypto miners.

"Show us your product, get a rate discount."

Bitcoins are virtual, not actual. There is no product to show. Even with money, one can pull out coin and paper currency that represents the face value of that currency. A bitcoin doesn't exist outside of a virtual environment.

So, with no product to show, they'd not get a discount. Put the power scale lower for the makers/producers of tangible goods and demonstrable services, and you're probably covered. I might be wrong, but off the top of my head, bitcoins are the only things that take tremendous amounts of power to "create", which don't result in tangible goods or services.

Or, you know, they could simply classify it as a virtual commodity and charge higher rates for making them.

Industry would like a word with you. They usually get cheaper rates the more power they buy in bulk. Iceland has a lot of fish processing plants. They need tons of power. This would only be viable if it only applied to Crypto miners.

Good point. I was also thinking that they could do better for themselves producing silicon (an electricity-driven process) instead of bitcoin, and lo and behold (paywalled article):

Quote:

Silicon Metal Producers Flock to Iceland for Cheap Power Prices, Omar R. Valdimarsson, BloombergMarch 16, 2015Iceland is preparing to become one of the world’s largest producers of silicon metal and polysilicon as low electricity prices attract four companies vying for the nation’s renewable energy resources.

Seems like a great way to make money by heating your home against the frigid winters, though. And it doesn't even come with the guilt of using fossil fuels to make funny money.

I'd rather that Iceland make a nation wide computing grid for that personally.

However as I understand it homes in Iceland are directly heated geothermally not via geothermally generated electricity so there's no savings to be made there.

Huh, well I guess the Icelanders are just lucky they can cheaply skim cash off the top of the world's financial follies using renewables. I wish I could do that! Ya can't even guilt 'em for not shipping power to other areas that use fossil fuels. There's no way to make that practical.

On the other hand it's much easier for me to get good Mexican food and I don't need an app to avoid accidentally banging my cousin, so I'd call it a pretty fair trade on the whole.

Incidentally, have you actually had Mexican food in Iceland? It's debatable whether the Mexican food in Japan was worse, but either way my stomach is clenching with the memory...

No, but I had "iced tea" there - which had one mostly melted cube of ice in some red water - $7. Also, the "best" ice cream in the country that was ok.

Now the fish & chips on the other hand were very good, but $20/serving.Just stick with the fish where ever you eat!

Industry would like a word with you. They usually get cheaper rates the more power they buy in bulk. Iceland has a lot of fish processing plants. They need tons of power. This would only be viable if it only applied to Crypto miners.

"Show us your product, get a rate discount."

Bitcoins are virtual, not actual. There is no product to show. Even with money, one can pull out coin and paper currency that represents the face value of that currency. A bitcoin doesn't exist outside of a virtual environment.

So, with no product to show, they'd not get a discount. Put the power scale lower for the makers/producers of tangible goods and demonstrable services, and you're probably covered. I might be wrong, but off the top of my head, bitcoins are the only things that take tremendous amounts of power to "create", which don't result in tangible goods or services.

Or, you know, they could simply classify it as a virtual commodity and charge higher rates for making them.

Bitcoin needs to die. Sorry. As much as I like disrupting world status quoes, bitcoin isn't helping the world. Its the social media of money.

Bitcoin has absolutely nothing to do with social media, except you may have seen an article about it on Facebook. Bitcoin is a wild speculation, that is difficult and expensive to send to someone, and most merchants have dropped it. It also has little to do with money, since fiat currency and credit cards are so much easier to use than it, especially in small amounts. I doubt it has the capacity disrupt anything financial, unless some hedge fund goes down when it collapses.

It is clear that before I move back to Iceland (I am a Icelander) I need to buy a surge protected electric plugger for my television and blu-ray player.

The problem is that when the smelters and the data centres for any reasons loose power it creates a knock out effect on the grid and at one time it took out 60% of Iceland homes and smaller companies (I was not living in Iceland at that time).

Since I am moving back to Iceland this summer I need to make an arrangements in order to protect my electronics from the electric grid problems. I just buy UPS for my PC (I already got two for my important computers) and routers.

What is also in plenty supply in Iceland and is good for data centres is the cold air. There is also a plenty of cold water if anyone uses that to cool down the server farm but I think in general they just use the cold air for cooling down the hardware. It's not just about cheap electricity price in Iceland.

Industry would like a word with you. They usually get cheaper rates the more power they buy in bulk. Iceland has a lot of fish processing plants. They need tons of power. This would only be viable if it only applied to Crypto miners.

With the rise in smart metering, I think it would be easy to identify industry and make an exception for those customers. If there is a private residence that is using an inordinate amount of power, I think an inverted bell curve rate chart could allow for a certain degree of usage while gradually making it expensive for miners who might take advantage of lower bulk rates. It doesn't seem like they would be too hard to identify miners. If it's in a normal residential neighborhood and doesn't smell like fish...

The outsized societal impact of Bitcoin and the other cryptocurrencies has squarely landed in the realm of sci-fi ... and we're living it.

Megawatts to compute something of zero intrinsic value.

I doubt whether any fiction writer could have imagined it.

I was talking about this the other night. It's hard to calculate the value of bitcoin because it is primarily the product of consumption. (I fully recognize that there are upstream producers (Nvidia, the power companies, etc. but it seems like the choke-point in the production of bitcoin is power).